Can Health Care Save Detroit?The U.S. auto industry may be showing some signs of life, but civic leaders in Detroit are looking to another sector to revive the Motor City: the health care industry. A deal to buy the city's largest health system would mean $850 million in improvements and 10,000 new jobs.

We're looking this week at Detroit and the many struggles facing that city. The beleaguered U.S. auto industry is showing some signs of life. Ford is gaining market share and GM is slowly paying back the government. Those gains, though, haven't really improved the job market in Detroit. Unemployment in the city ranks among the worst in the nation. So civic leaders are looking to another sector to revive the Motor City: health care. As Noah Ovshinsky of member station WDET reports, the city is hoping that industry will bring thousands of new jobs.

NOAH OVSHINSKY: A few weeks ago, officials with Detroit's largest health system made an announcement that was as startling as it was welcome, that they intended to sell the nonprofit to an investor-owned company. As part of the deal, Nashville-based Vanguard Health Systems promised to spend more than $800 million - yeah, you heard me right - $800 million on much-needed capital improvements.

If the deal goes through, hospital officials say it will be the largest single investment in Detroit, ever. For those who are charged with running the Detroit Medical Center and the city itself, the announcement couldn't come soon enough.

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OVSHINSKY: Walking through the E.R. at Sinai Grace Hospital, president Conrad Mallett's smile is in stark contrast to the maze-like facility he's showing off, which is dark, outdated and inefficient.

Mr. CONRAD MALLETT (President, Sinai Grace Hospital): These people have largely been in the hospital probably waiting for a bed at least three or four hours. And you can see for yourself the lack of privacy that all of these people are experiencing.

OVSHINSKY: Pointing to patients separated by small curtains, Mallett says quality isn't only about nurses, doctors and technology.

Mr. MALLETT: At the end of the day, the privacy that these men and women have a right to expect is provided by curtains, and it's just not the standard of care that people anywhere should experience, and Detroiters absolutely have a right to expect and receive better.

OVSHINSKY: If the deal with Vanguard is approved by state regulators, those curtains will soon be replaced by walls. The company has promised to spend more than $75 million on improvements at Sinai Grace.

The Detroit Medical Center - or the DMC, as it's called locally - is the city's primary safety net, providing more uncompensated care than any other health system in the state. That commitment comes at a cost. While the DMC has turned a profit for six years in a row, officials say the health system's payer mix makes raising money on Wall Street all but impossible. As a result, the facilities are showing their age, and potential patients like Amy Kuras look to DMC's competitors for care.

Ms. AMY KURAS (Freelance Journalist): You know, I remember my parents walked in right after, like, the day that he was born and they looked at the room we were in. And they're, like, are you kidding me? You have this all to yourself for the whole time that you're here? We've stayed in hotel rooms that aren't this big or nice.

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OVSHINSKY: Kuras is a freelance journalist who lives in the city of Detroit, but chose to have her babies at Beaumont Hospital, one of the DMC's suburban competitors. Nurses call it the Hilton. There are flat-screen TVs, pull-out beds for fathers and plenty of privacy. This is what the DMC and its aging facilities are up against, and the goal is to lure insured patients like Amy Kuras from miles around.

DMC officials say they even hope to take on hospitals like the Cleveland Clinic. That vision is met, though, with a healthy dose of skepticism by those who study such deals. Without selling hospitals, turning away needy patients or cutting services, experts say they don't see how Vanguard will get a good return on its investment.

Jill Horwitz is a University of Michigan law professor who studies nonprofit and for-profit hospitals.

Professor JILL HORWITZ (University of Michigan Law School): Every hospital in the country wants to start one of these centers of excellence or bringing in foreign patients, and it's a pretty tough business to succeed in. And it's unclear to me why this hospital would do better at it than its competitor hospitals.

Mayor DAVE BING (Detroit, Michigan): We are elated, to say the least, that somebody from the outside looks at Detroit as a place where they can make an investment and get a return on the investment. I think it will send a message around the country that we, as a city, are open for business.

OVSHINSKY: There are signs of investment fever. Not long after the DMC made its announcement, rival Henry Ford Health System said it, too, planned to invest hundreds of millions of dollars in its campus here. The message? Medicine could possibly replace motors as the engine of Detroit.

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